The Appellate Tribunal's powers are limited to the subject-matter of the appeal and it cannot set aside or deal with parts of the order that were not contested in the appeal.

Narayana Pai, J.—The assessee, deceased Pathikonda Balasubba Setty, was carrying on business as karta of a joint family in several articles. Among the lines of business, two were the buying and selling of groundnut kernel and manufacturing and selling of groundnut oil and oilcake. His account year was from Diwali to Diwali. His return of income for the account year ended 1st November, 1948, liable to assessment during the Income Tax year 1949-50 was not accepted as fully correct by the Income Tax Officer. He made therefore three additions to the income as returned as follows : To the gross profits attributable to the business of buying and selling of groundnut, he added a sum of Rs. 16,845 on the ground that the several transactions were not fully supported by vouchers and that, therefore, it was necessary to estimate the gross profits. He estimated the same at 10 per cent. of the overall turnover.

2. To the gross profit attributable to the business in groundnut oil and cake, he added a sum of Rs. 27,563 on the ground that the percentage of yield as returned was low. The officer though that the correct percentage of yield should be 12 1/2 per cent.

3. Besides his estimate of the correct percentage of the profits, to the gross turnover or the gross value of the raw material, he sought assurance to his opinion in certain other features of the assessee's account. He found on an examination of the accounts that there were entries purporting to be borrowing from eight different persons adding up to a sum of Rs. 33,776 which were suspicious and could not be regarded as genuine; he also found that entries relating to a deposit and a withdrawal of Rs. 14,000 on 15th January, 1948, were similarly open to suspicion or treat them as representing a separate head of income in respect of which an addition could or should be made to the income returned. His express observations in that regard in his order were :

"It should be mentioned here that the addition on account of enhancement of gross profit is supported by another feature also....

I find that at least the following items are not free from suspicion and therefore they deserve to be added. But since an addition is made on account of enhancement of gross profit, I am now only mentioning them as a supporting factor for the addition on account of enhancement of gross profit."

4. The officer also found a great discrepancy between the value of closing stock as found in the books of account of the assessee and the value of such stock on the last day of the account year found pledged or remaining pledged to certain banks. The discrepancy was of the order of Rs. 1,18,431. The assessee gave certain explanations which the officer did not find entirely satisfactory. He concluded the discussion of this topic with the observation :

"Allowing a very wide margin for the assessee on the statements, I think at least Rs. 20,000 would represent stocks, the source of which is not satisfactorily explained."

5. The assessee appealed to the Appellate Assistant Commissioner of Income Tax, Bangalore, who gave him substantial relief under his order dated 26th September, 1956.

6. In regard to the addition made by the assessing officer to the gross profit in the purchase and sale of groundnut, the Appellate Assistant Commissioner pointed out that 10 per cent. adopted by the original authority was excessive and that on the basis of the percentage of profit, in comparable businesses in the same circle as well as on the basis of previous orders of the Appellate tribunal relating to the same, the proper percentage to adopt would be 7.4. On this basis he found that the income actually returned by the assessee was the correct estimate and did not require enhancement. He, therefore, struck off the addition of the sum of Rs. 16,845 made by the Income Tax Officer this head.

7. On a similar re-estimate of yield relating to the manufacturing of oil and oilcake, the Appellate Assistant Commissioner reduced the addit